United Kingdom Interest Rate

The Bank of England voted unanimously to hold the Bank Rate at 0.75 percent on December 20th, saying that Brexit uncertainty had "intensified considerably" over the last month while inflation is expected to ease below the 2 percent target amid falling oil prices. Meanwhile, bank staff lowered slightly its forecast for UK quarterly economic growth in Q4 to 0.2 percent from 0.3 percent previously. Interest Rate in the United Kingdom averaged 7.55 percent from 1971 until 2018, reaching an all time high of 17 percent in November of 1979 and a record low of 0.25 percent in August of 2016.

Interest Rate in the United Kingdom is expected to be 0.75 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in the United Kingdom to stand at 1.00 in 12 months time. In the long-term, the United Kingdom Interest Rate is projected to trend around 1.75 percent in 2020, according to our econometric models.

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BoE Holds Rates on Brexit Uncertainty

The Bank of England voted unanimously to hold the Bank Rate at 0.75 percent on December 20th, saying that Brexit uncertainty had "intensified considerably" over the last month while inflation is expected to ease below the 2 percent target amid falling oil prices. Meanwhile, bank staff lowered slightly its forecast for UK quarterly economic growth in Q4 to 0.2 percent from 0.3 percent previously.

Excerpts from the BoE Monetary Policy Summary:

Since the MPC’s previous meeting, the near-term outlook for global growth has softened and downside risks to growth have increased. Global financial conditions have tightened noticeably, particularly in corporate credit markets. Oil prices have fallen significantly, however, which should provide some support to demand in advanced economies. The decline in oil prices also means that UK CPI inflation is likely to fall below 2% in coming months. The Committee judges that the loosening of fiscal policy in Budget 2018, announced after the November Inflation Report projections were finalised, will boost UK GDP by the end of the MPC’s forecast period by around 0.3%, all else equal.

Brexit uncertainties have intensified considerably since the Committee’s last meeting. These uncertainties are weighing on UK financial markets. UK bank funding costs and non-financial high-yield corporate bond spreads have risen sharply and by more than in other advanced economies. UK-focused equity prices have fallen materially. Sterling has depreciated further, and its volatility has risen substantially. Market-based indicators of inflation expectations in the United Kingdom have risen, including at longer horizons.

The further intensification of Brexit uncertainties, coupled with the slowing global economy, has also weighed on the near-term outlook for UK growth. Business investment has fallen for each of the past three quarters and is likely to remain weak in the near term. The housing market has remained subdued. Indicators of household consumption have generally been more resilient, although retail spending may be slowing.

The MPC has previously noted that shifting expectations about Brexit among financial markets, businesses and households could lead to greater-than-usual short-term volatility in UK data. Judging the appropriate stance of monetary policy requires separating these shorter-term developments from other more persistent factors affecting inflation and from the dynamics of the economy once greater clarity emerges about the nature of EU withdrawal.

Domestic inflationary pressures have continued to build. The labour market remains tight, with employment growth picking up in the latest data and the unemployment rate likely to stay around 4% in the near term. Annual growth in regular pay has risen to 3¼%, stronger than anticipated in the November Report. In contrast, services CPI inflation has been subdued. The inflation expectations of households and professional forecasters have remained broadly unchanged.

BoE Leaves Rates Unchanged
The Bank of England voted unanimously to leave the Bank Rate steady at 0.75 percent on November 1st 2018, in line with market expectations. Policymakers said that if the economy continues to develop in line with forecasts, further tightening will be appropriate. The stock of UK government bond purchases, financed by the issuance of central bank reserves, was maintained at £435 billion.Published on 2018-11-01

BoE Keeps Rates Steady
The Bank of England voted unanimously to leave the Bank Rate unchanged at 0.75 percent on September 13th 2018, following a 25bps hike in the previous meeting. The decision came in line with market expectations. The Committee voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at £10 billion and the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £435 billion.Published on 2018-09-13

BoE Hikes Bank Rate to 0.75%
The Bank of England voted unanimously to raise the Bank Rate by 25bps at 0.75 percent on August 2nd, saying recent data appeared to confirm that the dip in output in the first quarter was temporary and that the labour market has continued to tighten and wage growth has firmed.Published on 2018-08-02

BoE Keeps Rates Steady
The Bank of England left its key Bank Rate on hold at 0.5 percent on June 21st 2018, in line with market expectations. However, 3 out of 9 policymakers, including BoE Chief Economist, voted for a rate hike compared with only 2 votes in the previous meeting. Published on 2018-06-21

United Kingdom Interest Rate

In the United Kingdom, benchmark interest rate is set by the Monetary Policy Committee (MPC). The Bank of England official interest rate is the repo rate. This repo rate applies to open market operations of the Bank of England with a group of counterparties (banks, building societies, securities firms). This page provides - United Kingdom Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. United Kingdom Interest Rate - actual data, historical chart and calendar of releases - was last updated on January of 2019.